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Technology Stocks : DSC Communications -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (4103)	4/28/1998 1:23:00 AM
From: Steve Fancy	Respond to of 4429

DSC Communications' 1st-Quarter Loss Was Worse Than Expected Dow Jones Online News, Monday, April 27, 1998 at 19:05 NEW YORK -(Dow Jones)- DSC Communications Corp. Monday produced its second financial disappointment in less than a month, reporting a first-quarter loss that was larger than analysts expected on revenue that was decidedly worse than the company's own warnings. The Dallas-based maker of telecommunications equipment said it had a loss of $30.1 million, or 25 cents a share in the first quarter. Twenty analysts surveyed by First Call had a mean estimate for a loss of 20 cents a share, based on the company's April 1 statement that it expected to lose between 15 cents and 25 cents a share in the quarter. Until then, analysts had been predicting a profit of about 15 cents a share, a bit above year-earlier net income of $16.4 million, or 14 cents a share. In its April 1 warning, DSC blamed a soft Asian market and a pending merger that preoccupied two big customers. At that time, the company also said revenue would total between $340 million and $360 million. But in Monday's financial statement, DSC said revenue in the quarter dropped 9.1% from a year earlier, to $314.8 million. The company said some product deliveries were moved out to future periods. The revenue decline occurred primarily within the access and switch product groups, the company said, falling because of a number of factors, including delayed purchases, softness in deliveries of wireless switch platforms and the Asian economic crisis and its effect on a key customer's capital spending activities. These declines more than offset an increase in transport revenue, including increased revenue from the company's European optical transmission business and broadband digital cross-connect business. The company had an operating loss of $41.3 million as gross margin fell to 29% from 40% a year ago. Operating expenses grew to $132.2 million from $115.3 million, due to increased product-development activities. On April 1, DSC said the Asian crisis appeared to have hurt sales to a key Japanese customer and that two of its bigger customers, MCI Communications Inc. (MCIC) and WorldCom Inc. (WCOM), had postponed equipment purchases in light of their pending merger. Two days later, DSC announced that its president and chief executive, James L. Donald, planned to retire. The company said it had retained an executive recruitment firm to search for a successor. DSC makes digital-switching, transmission and access products for video, data and voice transmission. The results were announced after U.S. markets closed. DSC's shares (DIGI) ended down 43.8 cents, or 2.4%, at $17.813. Copyright (c) 1998 Dow Jones & Company, Inc. All Rights Reserved.

To: Steve Fancy who wrote (4103)	4/28/1998 1:27:00 AM
From: Steve Fancy	Read Replies (1) \| Respond to of 4429

DSC (NASDAQ:DIGI) optimistic on 1998 second half Reuters, Monday, April 27, 1998 at 18:21 DALLAS, April 27 (Reuters) - DSC Communications Corp. reported on Monday a first quarter loss at the low end of its previously announced expectations and remained cautious about business prospects for the second quarter. Nonetheless, the supplier of telecom carrier equipment said in a statement it was optimistic that business conditions would improve in the second half of this year. "The company's first quarter financial performance was an obvious disappointment," DSC chairman and chief executive James Donald said. "It was unacceptable and, accordingly, remedial actions are being taken." "Certain industry conditions are expected to have less of a disruptive impact going forward," Donald said. "While the confluence of these conditions is expected to negatively affect our business in the first half of this year, we are optimistic that second-half conditions will improve," he said. DSC made the comments in reporting a net loss for the first quarter of $30.1 million, or $0.25 per diluted share, compared to a net profit of $16.4 million, or $0.14 per diluted share, for the same period in 1997. The First Call consensus of analysts estimates projected DSC would report a loss of $0.20 per share. On April 1, DSC had projected a net loss of between $0.15 to $0.25 per share. Donald said his optimism was based on DSC's significant first quarter backlog growth, strong infrastructure shipments, continued improvement in its transport business and strong opportunities its intelligent network switching segment. New products such as its Litespan Broadband and GSM wireless equipment and systems to multiply the capacity of fiber optic networks and to provide high-speed Internet access over phone lines would boost revenue in the second-half. Revenue for the 1998 first quarter was $314.8 million compared to $346.2 million recorded in the 1997 first quarter, DSC said. Revenue was modestly outside the expected range due in part to certain product deliveries having been moved out to future periods, it noted. The revenue decline in the first quarter of 1998 occurred primarily within telecom equipment supplier's access and switch product groups. "Specifically, we believe that two of our long-distance customers deferred equipment purchases," Donald said. "We also experienced slower deliveries of wireless systems, lower than expected Litespan-2000 line-card volumes and delayed capital commitments from a key Japanese switch customer," he said in citing reasons for the falling revenues and profits. DSC posted an operating loss of $41.3 million, as its gross margin dropped to 29 percent in the 1998 first quarter from 40 percent in the first quarter of 1997. The company said the lower profit margins were in line with the levels it had projected in its April 1 earnings warning. Gross margins were hurt by lower than anticipated business volumes and shifts in the mix of products sold. In addition, operating expenses grew from $115.3 million in the first quarter of 1997 to $132.3 million in the first quarter of 1998, due primarily to increased costs in developing products. The revenue declines in its access and switching businesses more than offset a rise in transport revenue, including increased sales in DSC's European optical transmission business and broadband digital cross-connect business. The decline in access revenue was the result of an unfavorable volume of expansion cards versus strong infrastructure shipments, the company said. DSC's products typically are sold in the form of plug-in cards that are inserted into the network switching systems of large telecommunication carriers. Switch product revenues were hurt by many factors, among them delayed purchases, softness in deliveries of wireless switch systems, and the Asian economic crisis and its effect on a key customer's capital spending. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (4103)	4/28/1998 1:30:00 AM
From: Steve Fancy	Read Replies (1) \| Respond to of 4429

I think Mr Donald is trying to get out before the lawsuits start. Those lawyers are thirsty these days. They're probably hoping by his leaving that maybe they'll get skipped over. Somethings bound to happen with this company, even if its short lived enthusiasm over a new CEO. In fact as I think about it, some October 20's or 22.5's don't sound half bad, depending on what happens over the next couple days. The bad news is probably all built in. Funny, the one thing Mr Donald didn't mention...with himself retiring, things almost have to get better. Couldn't be done much worse from my perspective. sf